Bitwise Pioneers Allocation via Maple Finance
Bitwise Pioneers Allocation via Maple Finance
Leading crypto asset manager and ETF provider, Bitwise, has announced its foray into decentralized finance (DeFi). They’ve teamed up with Maple Finance, specialists in on-chain credit, marking their initial investment in this burgeoning sector. This collaboration is set to unlock access to compliant, on-chain investment avenues for Bitwise’s institutional clientele.
This move really underscores the growing trend of institutional capital making a shift. We’re seeing a move away from traditional fixed-income products towards on-chain lending options that are tailored to specific risk profiles. In a recent statement, Bitwise noted:
“This is a major turning point as institutional investment increasingly looks for well-structured, transparent, and yield-generating opportunities within the exciting world of digital assets.”
– Bitwise
Crypto lending evolves with transparency and risk management at its core
The cryptocurrency lending space, while full of potential, hasn’t been without its challenges. We’ve seen prominent bankruptcies, notably with centralized players like Celsius and BlockFi. The beauty of putting lending activity on-chain, in theory, is that it significantly reduces the chances of human bias in default scenarios and naturally promotes transparency.
Maple founder Sid Powell pointed out that back in 2022, market leverage was considerably higher than today’s levels. He explained that a key concern was how this amplified contagion risks, as interconnected borrowing and lending created a web of vulnerability between different lending platforms.
Maple provides both over- and under-collateralized loans backed by digital assets. Since launching in 2021, they’ve consistently delivered solid, risk-adjusted returns. Last year marked the introduction of SYRUP, their protocol’s governance and staking asset. SYRUP empowers holders to participate in governance decisions and stake their assets to bolster protocol security and earn rewards.
Powell highlighted a shift in their strategy. Currently, the protocol is primarily focused on over-collateralized loans, moving away from their initial focus on under-collateralized lending. He mentioned that when Maple entered the market in 2021, the over-collateralized lending space seemed oversaturated. Today, the protocol manages an impressive $620 million in total value locked.
Powell further explained that pool segregation is a key differentiator for them. For lenders who prefer a lower-risk approach, they have the option to invest exclusively in loans backed by Bitcoin and ETH. Alternatively, for those comfortable taking on a bit more risk for potentially higher returns, they can choose pools collateralized by assets like Solana or XRP.
Maple and Bitwise spearhead innovation in on-chain investment and asset management
Earlier this year, Maple launched an interesting “Lend + Long” structured yield product. This product cleverly uses revenue from its high-yield lending pool to purchase Bitcoin call options. It’s specifically designed and marketed towards institutional investors, corporate treasuries, and yield-focused funds. Looking back at 2023, Maple also expanded its offerings with the launch of Maple Direct, a direct lending arm.
Bitwise boasts a comprehensive suite of investment solutions. They offer a variety of index funds and actively managed products, including ETFs, separately managed accounts, private funds, and staking services. The firm reports managing $12 billion in client assets, serving a broad spectrum of clients including financial advisors, family offices, and institutional investors.
Bitwise has been particularly active recently in filing for alternative crypto ETFs, including products that offer exposure to tokens like APT and XRP. As digital representations of real-world assets become increasingly important in traditional finance, firms are setting their sights beyond just tokenized Treasury Bills. This shift has gained momentum as traditional interest rates have declined, while DeFi yields have rebounded, presenting compelling opportunities.
Powell expressed Bitwise’s strong belief in the on-chain future of asset management. He highlighted the potential for greater transparency and access to unique opportunities that are simply not available in traditional finance.
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